Excess inventory is a problem that many businesses encounter.
Dealing with surplus stock is not only a burden in terms of storage, but it can also present problems from a cost perspective too, particularly if you don’t have an effective system in place to manage surplus stock properly.
If retailers are to make their excess inventory profitable, a certain degree of creativity is needed.
Overstock can generate a huge amount of waste and lost revenue for business. Before looking at some of the ways that you can profit from your excess stock, it’s important to recognise what it is and how it occurs.
Surplus stock is the stock that you have left once it reaches the end of its natural product cycle. This could, for example, be end of season stock.
Regardless of the products that you sell, whether it’s clothing or homeware, storing this surplus stock is expensive, discarding it even more so, not to mention the impact that all of this waste has on the environment and your bottom line. Often, excess inventory happens because sales projections didn’t meet customer demand. There could be other factors that influence sales too, some of which are beyond your control such as wider economic difficulties.
Knowing how and most importantly where to sell stock that you no longer need is crucial if you are to make it profitable.
#1 Liquidation Companies
Finding a liquidator for your stock is one of the most popular ways to deal with stock you no longer need.
No matter how unique or obscure your product is there will be a liquidator out there who will buy up your surplus stock. That said, liquidators will often buy in bulk so this option may not be suitable for smaller businesses with a smaller inventory. Shop around and make sure that you find a liquidator who will give you the best possible price.
This option is widely used for businesses who sell clothing. A liquidator will buy your stock directly from you.
While it’s not the most profitable method it’s a way of quickly handling excess inventory. The liquidator will often require you to deliver your inventory to them so this may incur an additional cost with a courier if you can’t transport the products yourself. Before you start any negotiations with a liquidator always know the value of your inventory, so you are getting the best possible price.
#2 Third Party Platforms
While liquidators may be an idea, another viable option is to use a third party platform. This is particularly beneficial if you don’t have enough stock to sell in bulk to a liquidator. Ideally suited to small businesses, placing inventory onto platforms such as Amazon and eBay are excellent ways to reach new customers.
If you do use a platform such as Amazon, you will need to price your products at a competitive rate to ensure that they are attractive enough for people to buy. In addition, each web platform will also have it’s own rules, selling criteria and fees so it’s important to familiarise yourself with these and make sure that you are happy before you start listing your stock on there.
If you have your own online store, you can leverage this and offer your products at significant discounts. Your approach however for this strategy must be targeted with a typical discount expected between 40% and 70% which will usually generate the most sales. There are three main sales that you can run:
Clearance – Take place several times throughout the year, perhaps at the end of a season to clear stock. If you have an email list, send an announcement to your subscribers letting them know about the sale and the discounts that you are offering. Also post to your social platforms to maximise your reach.
Seasonal – Another type of sale that you can run is a seasonal one, particularly if your products change depending on the time of the year. Use promotions and offer incentives for seasonal sales to attract the most attention.
Flash – This type of sale runs for a limited period of time and is one of the most effective ways to sell discounted products.
If you are offering sales on any of your products, be mindful of the sector in which you operate because huge discounts particularly in the luxury market can have the opposite effect of what you are trying to achieve.
One of the most popular ways to sell off inventory is to bundle your products, perhaps pairing them or producing a bundle of 3-5 items which are sold as a package. When you sell products as a bundle you can sell them at a lower price than you would if the customer bought them all individually making this type of offer attractive to prospects and existing customers. There are several ways in which you can bundle products such as complementary products or combine fast-moving and slow-moving items.
#5 Repackaging Products
There may be products in your product line that are just not selling as well as you thought they would. There could be a whole host of reasons why products don’t sell. One of the best ways that you can increase the likelihood of them selling is to repackage, reposition and remarket them. You can do this in a number of ways:
- Rewrite product descriptions
- Capture new images of the product.
- Adopt a new approach to selling.
- Change product placement if you have them on site.
- Reviewing your marketing strategy and making sure that you are targeting the right people.
Make better use of the returns process
All businesses will have excess stock, regardless of how well managed your inventory is.
Developing a tailored strategy that maps out how you will deal with surplus stock at the end of a season or the end of a product line to make it profitable for your business is important.
When it comes to selling excess inventory, be creative, test and try out different options.
In doing so you will find a solution that deals with the stock you don’t need any more while generating the maximum amount of profit for your business. The more creative you are, the higher your profit margins will be.
PS, Are returns & overstock damaging your business? If you are ready to join the reCommerce revolution with a sustainable selling solution then contact ClearCycle today.